Jani Ziedins (pronounced Ya-nee) is a full-time investor and writer that has successfully traded stocks and options for two-decades. He earned a B.S. in Mechanical Engineering from the Colorado School of Mines and an MBA and M.S. Marketing from the University of Colorado Denver. His prior professional experience includes manufacturing engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two young children.
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Q: What is your track record?
A: I’m proud of my trading history and used to publish it, but I found promoting performance attracted the wrong type of subscriber. If you are lazy, looking for shortcuts, and expect me to trade for you, this is definitely the wrong service for you. Trading is like any other skill and it takes effort, time, and dedication. I created this service to help motivated people become better traders, not for lazy people looking to mindlessly mirror my trades.
While you cannot judge this service based on its historical performance, I invite you to try the Free Two-Week Trial so you can experience this service for yourself. In addition to the free trial, I also offer a 30-day money back guarantee on annual subscriptions and a low-risk monthly membership with minimal commitment. But if you are like most of my subscribers, it won’t take long before you appreciate the value and upgrade to an annual subscription.
Q: How come you are not a professional money manager?
A: I enjoy working from home and spending extra time with my family. Being a professional money manager is far more than just trading. It means having a staff, processing mountains of paperwork, subjecting myself to SEC audits, and spending the bulk of my time and energy recruiting new investors. I love trading and keeping this an educational service allows me to focus on the markets, not running a business.
Q: What do you trade and how many positions do you hold?
A: My market exposure is split into three categories for risk management and diversification purposes.
The largest piece is buy-and-hold index funds. I stick with these positions for multiple years and only trade them when the market is going through a major change in direction. This portion of my portfolio does well in strong uptrends.
The next chunk is dedicated to swing-trading the indexes using leveraged ETFs. Most of the time I only hold one position at a time and my timeframe ranges between days and weeks. This portion of my portfolio does best in sideways, choppy, and uncertain markets.
The third and smallest chunk is allocated to the most speculative, highest risk, and highest reward trades. These are the lottery tickets that will either be hugely profitable, or crash and burn. Because of the high-risk nature of these positions, this also represents the smallest portion of my portfolio. These investments do best in euphoric markets where greed overwhelms common sense.
Q: How often do you trade?
A: Obviously it varies based on market conditions, but one or two trades a month is typical.
Q: Do you use stop-loss orders?
A: Stop-loss orders are a must for new traders and those with busy lives, but I follow the market every day and don’t rely on automated stops to close my positions. For my style of trading, the why matters as much as the what, meaning I evaluate the sources of the weakness before I sell. Occasionally that means I get out later than if I had an automated stop, but more often than not I sell poor price-action long before a traditional stop-loss level is reached, or I confidently hold through a routine dip. But this is how I manage my risk. Everyone needs to develop a personalized plan designed around their risk tolerance, schedule, and willingness to admit defeat.
Q: Why don’t you do more with options?
A: Getting the direction right is challenging enough. To successfully trade options you also need to know:
Miscalculate one of these factors and a great trading idea produces disappointing results. There are other ways to profit from options, but for swing-traders, most of the time it is better to stick with the underlying so you only have to decide up or down.
Q: How long have you been doing this?
A: I’ve been trading for more than two-decades and doing it full-time since 2008. I started the Cracked.Market blog in 2012 and have been offering a premium subscription since 2013.
Q: Why do you blog?
A: It all started on an investing forum. I found engaging other users helped me be more thoughtful, rational, and deliberate with my analysis and trading decisions. Putting my best ideas out there for all to see (and criticize) held me accountable and helped mitigate the emotion that always tries to sneak into our trading. The blog grew from wanting to share these thoughts and ideas with a larger audience. And it really is true, the best way to learn something is to teach it to someone else. I get as much out of this experience as my loyal readers, and for that I thank everyone.
Q: If you are a successful investor, why do you charge a subscription fee?
A: I enjoy supporting the trading community that has already given me so much. That is why much of my content is available for free. But for traders that want more actionable content, it is reasonable to charge a fee to those profiting off my ideas. I use the subscription revenue to cover the blog’s overhead and related expenses, making it possible to continue doing this for both free users and premium subscribers.
Q: Why shouldn’t I simply follow the guy with the best performance last year?
A: Many retail investors underperform the market because they chase what was hot last year. If there is one guarantee in the market, it is that a trader’s performance will be different next year. Some will do better. Some will do worse. But outside of a statistical fluke, no one will do exactly the same.
If a person believes in reversion to the mean (I do), then a hot investor will invariably cool down and a cool investor will eventually warm up. Unfortunately most retail customers bail on the cool guy who is about to warm up and give all their money to the hot guy who is about to cool down. It doesn’t take a math degree to realize abandoning someone who is about to get hot, only to jump aboard someone else on the verge of cooling down doesn’t produce worthwhile results.
Q: If chasing performance doesn’t work, what is the best way to pick a mentor?
A: Find a mentor who has a similar view on the market as you do. No matter how impressive the mentor’s track record, if you are a square peg (value), don’t try to fit in a round hole (momentum). Compatibility and consistency are keys to long-term success. Some years the performance will be great. Other years it won’t. But it averages out over the long-term if you stay true to your strategy.
If I was forced to squeeze my trading philosophy into a single sentence, it would be:
Anticipating market moves by analyzing the news flow and interpreting the resulting price-action.
In overly simplified terms, I follow the news, watch how the market responds to the news, and then base future trades on the resulting indications that this is a: strong market (buy dips), a flat market (buy weakness and sell strength), or a weak market (short bounces).
In addition to binary views on good news/bad news, we also need to determine if the news even matters (i.e. is already priced in). For example I fear what I don't know, not what everyone is talking about. If the headlines are simply recycling old news, most of the time we can safely ignore them because anyone who feared those headlines sold the first few rounds. By the time we get to the third and fourth round, there are so few people left to sell it stops mattering. When bad news doesn't matter to the market, then it doesn't matter to us.
The above setup also leads to one of the most dangerous situations in the market. Few things are more costly than arguing with the market. This happens when the market refuses to react in a way that seems rational or logical. Obviously bad news should send the marke tumbling, yet at times prices barely dip. Too often traders assume the market is wrong and feel compelled to trade against it. Unfortunately the market is far larger than we are and it will simply run us over. If you don't agree with the market, it means you are wrong. End of story.
By nature I'm contrarian and that works especially well in the above situations when the crowd disagrees with the market. Everyone loves to talk about what the market is doing, but I actually find if far more insightful to look at what it is not doing. For example there are few things more bullish than a market that refuses to go down on bad news and few things scarier than a market that cannot rally on good news.
Knowing if the market is strong, flat, or weak only gives us half of the information required to make savvy trade. I also incorporate basic technical analysis of support, resistance, and trend lines to give me a full-picture understanding of where the biggest risks and greatest opportunities lie. The same trading signal will mean one thing at the lower end of a trading range than it does at the upper end. Sometimes we can ignore certain things after a pullback in price. Other times we assume the risks are higher when the market is at the upper end of a range. I don't know what will knock us down, only that we are vulnerable to any bump in the road. Just like how I know a market that refuses to go down will eventually go up and a market that rebound will eventually tumble.
There are a million different way to trade the market profitable. This way works for me and I'd love to be able to teach you how I do it.